Restructuring of MGM/UA Under Review

MGM/UA Entertainment Co. executives huddled Tuesday to debate the restructuring of the company in the wake of the departure of Vice Chairman Frank Yablans, who resigned under pressure Monday, industry sources said.

MGM/UA sought Yablans' resignation because of dismal box-office results, industry sources said. Yablans could not be reached for comment, but he issued a statement confirming his departure.

The resignation had been widely anticipated, since Yablans' power was diminished seven weeks ago with MGM/UA's decision to treat United Artists Corp as a separate film production company reporting to new executives led by veteran film maker Alan Ladd Jr.

Although Ladd's responsibilities are certain to increase with Yablans' departure, sources said the company is undecided about whether to maintain two separate untis under the United Artists and MGM banners.

A merger of the two units could quell speculation that MGM/UA's controlling shareholder, Kirk Kerkorian, has been trying to sell one of the two motion picture entities.

Although the separation of the film units was viewed in some quarters as a ruse to bring in the Ladd team, other industry executives scoffed at that notion because of the high overhead costs associated with a second production unit.

If the units operate independently, sources said that Jay Kanter will be asked to preside over MGM Films, while Richard L. Berger will head United Artists Corp. Both men will report to Ladd, who recently hired Kanter as UA's president of worldwide motion picture production and Berger as UA's senior vice president of production.

In a separate move, MGM said its directors have approved a previously announced plan to acquire the publicly held shares of MGM/UA Home Entertainment Group Inc., which were sold in a public offering two years ago. MGM said it anticipates a meeting of the Home Entertainment Group shareholders to approve the plan in late April or early May.

Lee Isgur, an analyst for Paine Webber in New York, said he expects some shareholder suits to challenge the fairness of the price offered by MGM. Isgur said that, in his view, the offer is worth between $17 and $22.50 per share instead of the $30 to $40 range that he believes the stock could command.

Isgur said MGM/UA's desire to regain 100% control of the home-video company fuels speculation that Kerkorian wants to enhance the value of GMB/UA Entertainment in order to sell all or part of it.

"That's the only reason I can see for it," Isghur said, speculating that Kerkorian might want greater liquidity to invest in the gaming industry. "He might be trying to raise some extra funds, to get very, very aggressive with the (MGM) Grand Hotels. He likes gaming best of all," Isgur said. Kerkorian is also the controlling shareholder of Las Vegas-based MGM Grand Hotels Inc.

Metro-Goldwyn-Mayer Film Co. acquired United Artists Corp. for $380 million in July, 1981, vowing to produce and market separate MGM and United Artists products.

In his prepared statement, however, Yablans noted that, during his two years as MGM/UA vice chairman and chief operating officer, "all segments of the company reported directly" to him.

Yablans said he will announce his plans after he "supervises the orderly transition of his current MGM/UA duties."